S&P Global has downgraded the rating assessing the quality of French debt. However, analysts at the Financial Times suggest that this decision will primarily have political rather than economic consequences.
S&P Global lowered France’s long-term issuer rating to AA- from AA, citing the 2023 budget deficit and negative economic forecasts. The rating agency expressed concern that the trajectory of government debt as a share of gross domestic product would continue to rise through 2027, contrary to earlier expectations.
France’s slower-than-expected economic growth was another reason for the downgrade, S&P analysts added, fearing that political fragmentation could prevent President Emmanuel Macron's government from implementing necessary reforms and addressing budgetary imbalances.
According to the Financial Times, the downgrade, which is the most significant for the French economy in the past decade, could deal a heavy blow to the country's political climate. At the same time, the financial impact is expected to be limited.
